Big tech challenges the big insurance firms

Car insurance  picture: Shutterstock

The ITC Global insurtech connect digital conference discussed the threat to traditional insurance companies posed by tech giants like Amazon, Global and Facebook.

The ITC Global insurtech connect digital conference discussed the threat to traditional insurance companies posed by tech giants like Amazon, Global and Facebook.

KPMG Israel financial risk management partner Ilanit Navon Adesman said at the ITC Global insurtech digital conference, during "David and Goliath - the Israeli Insurtech Version" session. "As I see the global insurance industry and also the insurance industry in Israel, the appetite for digitization is very high for two main reasons. The first one is the big techs - Amazon, Google, Facebook - getting into the field of financial services all around. It started with payments with credit and now we are seeing also the move to insurance. We all know the trend to buy accreditors by the big techs, but now, after Covid, we see them getting into the field."

She added, "We all, in the lockdown period, got addicted to Google, Facebook and whatever, and the information that those companies have about us also gives it a very good chance to sell us insurance and this is one of the fears of the insurance industry, to see those giants, and we already see a few of them getting into the market."

Viola Fintech general partner Tomer Michaeli warned that new companies entering the insurance industry must be wary of the heavy regulation involved. "In fintech and insurtech, regulation plays such an important role that any investor that invests seriously in fintech, and especially in highly regulated parts, needs to take a very close look at the regulatory aspects of the business and make sure that the founders know what they’re doing, that the product really meets the necessary regulations and so on, because if it’s not, it will be very painful at some point."

Yinnon Dolev, Head of Sompo Digital Lab Israel at Sompo Holdings stressed that traditional insurance companies are not being left behind and striving to integrate technology into their systems, "All of the insurance companies are now leveraging AI to improve customer experiences and become more efficient. We’re seeing insurance companies hiring data scientists and building their own capabilities. there still room for innovation? We’re hearing a lot about insurtech startups doing similar things, everybody is kind of trying to do the Lemonade effect. Where and is there room for growth and innovation."

Neta Rozy CTO & Co-Founder at Parametrix, which insures businesses from IT downtimes, such as cloud outages, e-commerce downtime, payment failures and more, has also seen this trend. "There definitely is room for innovation and actually, the fact that insurers are hiring data scientists and engineers has only made it easier to implement innovation, technological or digital innovation. If it used to be that maybe their technology was a little bit too far ahead in order to easily implement inside such a large company or such a large insurer, then today, if you do have a technological team in-house, then it’s much easier to take these far more advanced technologies and implement them. And so we actually have seen that being very beneficial and there is still a lot of room for innovation."

Navon Adesman attributes the Covid-19 pandemic with hastening technological change in the insurance industry. "Covid has also made a big change in the industry pushing us five years ahead. In many of the lines of business, including the back office, the shift in employment patterns to working from home and having to do everything digital has made a change, including giving the partners and agents access to the insurance systems directly, so they can move on with the processes and not delay things because of working from home and also the direct line to the customers themselves because when we were in the lockdown, we still need to buy insurance and everything has moved very very quickly to digital."

But Michaeli added that the Covid-19 crisis has in many cases slowed technological progress. "For many companies, it made the need much clearer and may have helped accelerate the processes, but some companies actually found this crisis as an excuse to stop with innovation activities and, because we are now in a crisis, you need to take care of the really important stuff, which is the next 10 minutes or the next hour or the next day without long-term thinking."

Published by Globes, Israel business news - en.globes.co.il - on October 25, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Car insurance  picture: Shutterstock
Car insurance picture: Shutterstock
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